Bankers' pay has been brought back into the media spotlight after David Cameron's former director of strategy said banking executives should not be paid more than top civil servants.
"If you are a company that requires bailing out should you go wrong, then you should be considered part of the public sector and the pay of your executives should be capped at the same levels as the civil service pay levels," said Steve Hilton. "That would be a powerful incentive."
His proposal would mean multi-million pound pay packages being slashed to between £100,000 and £200,000, says BBC business editor Kamal Ahmed.
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In the UK, the banking bonus cap introduced in 2013 limits bonuses to between 100 and 200 percent of end of year salary, but there are no restriction on bankers annual pay.
Hilton also accused the government of missing an opportunity to reform the banking sector after the financial crisis because it relied on advice from City bosses. "What you saw after the financial crash was the same people who worked in the banks coming into the government to advise the government about how to respond to the crash," he said.
Earlier the month, International Monetary Fund chief Christine Lagarde joined calls for an urgent shake-up of bankers' pay. She said pay practices needed to encourage the long-term performance of banks instead of short-term gains, the Financial Times reported.
She also argued that regulation alone cannot solve the excessive pay problem. "Whether something is right or wrong cannot be simply reduced to whether or not it is permissible under the law," Lagarde said. "What is needed is a culture that induces bankers to do the right thing, even if nobody is watching."
Unsurprisingly, those in the banking industry argue that their pay packets are well deserved. "Do I deserve a million?" a banking equity analyst at a major London bank told The Guardian. "Do I think the balance between skill and pay is right? If a client is managing a £10bn fund and you stop him from making a mistake that would have cost him 2 per cent, and you do that two or three times a year… That is worth a lot."
